Heavy Vehicle Use Tax

Funding Our Nation's Highway Programs and Leveling the Playing Field

HVUT Penalties

Though there are many ways to evade the HVUT, documented cases are reasonably
rare. This page highlights three HVUT evasion cases: (a) a case in Montana
of international carrier evasion, (b) a case of re-titling vehicles to avoid
providing proof of payment in Illinois, and (c) a case of false exemption in
Washington. A description of each case follows.

International carrier evasion of HVUT. One joint border inspection
program conducted in Montana suggests that HVUT evasion by international carriers
may be a problem. The investigation, which took place between September 1995
and September 1996, represented a cooperative effort between the State of Montana,
the IRS, U.S. Customs, the Montana and Idaho National Guard, the U.S. DOT,
and the Alberta Treasury. Inspections of fuel loads, cargos, vehicle safety,
driver logs, fuel use, licensing of vehicles, and registration of vehicles
were conducted at numerous ports of entry, including the ports of Sweetgrass,
Roosville, Del Bonita, and Whitlash.

Under the joint border inspection project, 1,188 commercial vehicles were
inspected. Of those vehicles inspected, 512 (43 percent) were not in compliance
with the federal HVUT, four commercial vehicles (0.3 percent) were operating
with dyed fuel in their supply tanks, and 26 (2.2 percent) were not in full
compliance with IFTA and IRP regulations. During the operation, 36 fuel tankers
were checked and 22 (61 percent) were guilty of dyed fuel violations, including
improper invoicing or the mislabeling of the fuel. The border project yielded
$1.4 million in state and federal assessments, averaging $86,609 per day.

Re-titling vehicles to avoid the HVUT. In November 2001,
an owner of a small trucking company was found guilty of HVUT evasion. The
owner of the trucking company told the court he evaded HVUT by re-titling his
heavy vehicles each year in Illinois. He specifically changed the names of
ownership from himself to his company and back again. By continually changing
the ownership name, he was able to avoid providing proof that he had paid the
HVUT for 11 years.

False exemption. A Native-American member of a western Indian
Tribe claimed an exemption for HVUT and diesel fuel tax using the Native American
exemption in 26 CFR 41.6001-2 for tribal use. The individual used his logging
truck to deliver logs to off-reservation mills. The treaty contained no express
exemptive language. The case was found in favor of the U.S. government.